Stocks closed solidly higher on Wall Street Monday after a batch of encouraging global economic data kept investors in a buying mood.
Financial and technology companies powered much of the rally, which extended the market’s gains from last week, when the benchmark S&P 500 closed out its best quarter in nearly a decade.
In another hopeful sign, long-term bond yields rose above their recent lows, following a sharp drop last month that flashed a possible recession warning, rattling Wall Street.
Those concerns were allayed Monday as new economic data suggested a brighter outlook for the U.S. economy. A gauge of U.S. manufacturing notched a big gain in March, while a separate report showed construction spending climbed in February. Meanwhile, an economic report out of China showed growth in exports, employment and orders.
While the more encouraging data gave stocks a boost, the market could face some bumps ahead, said Liz Ann Sonders, chief investment strategist at Charles Schwab.
“The hurdle in the near-term is still going to be earnings,” she said. “That’s the next important phase.”
The S&P 500 gained 32.79 points, or 1.2%, to 2,867.19, notching a three-day winning streak.
The Dow Jones Industrial Average jumped 329.74 points, or 1.3%, to 26,258.42. The Nasdaq composite climbed 99.59 points, or 1.3%, to 7,828.91. The Russell 2000 index of smaller company stocks picked up 16.33 points, for a 1.1% gain, to 1,556.06.
Major European stock indexes finished broadly higher.
Monday’s gains followed a strong finish to the first quarter for U.S. stocks. The S&P 500 index is now up 14.4% this year, a big turnaround after the index skidded 14 percent in the final quarter of 2018.
Financial and technology companies powered the latest rally. Investors tend to favor those sectors when they’re confident the economy will continue growing. Bank of America gained 3.4% and Intel rose 1.5%.
Consumer product makers and utility companies, which are considered safe-play investments, lagged the market. Clorox fell 1.2% and NRG Energy slid 1.7%.
Bond yields continued rising in another sign that investors are confident in the economy’s growth. That came as a welcome relief following a sharp drop in bond yields to their lowest levels in more than a year.
The yield on the 10-year Treasury note rose sharply, to 2.50% from 2.41% late Friday. It also rose back above the yield on the three-month Treasury bill.
The shift reverses an “inversion” in bond yields that alarmed investors last month because such a phenomenon, when it persists over time, has preceded recessions in the past.
Key bond yields fell to their lowest levels in more than a year on March 22 and continued to slide much of last week after the Federal Reserve said it was seeing slower growth in the economy and no longer expected to raise interest rates this year.
“You look to the bond market to be a bit more skeptical and a bit ahead of the equity market on where things are going,” said Tom Martin, senior portfolio manager with Globalt Investments. “So, the movement upward in the 10 year (yield) is a bounce that says ‘OK, we realize there are these issues of a slowdown, but it’s not a disaster.'”
The rise in bond yields helped boost bank stocks. Higher bond yields mean that banks can benefit from higher interest rates on loans. Shares in JPMorgan Chase, Citigroup and Capital One Financial each posted a 3.4% gain.
Wynn Resorts led all stocks in the S&P 500 as traders welcomed a solid revenue report from the casino operator’s businesses in Macau and upbeat economic data from China. The stock jumped 8.4%.
Lyft plunged 11.9% on its second full day of trading, falling below its initial public offering price of $72 a share. The ride-hailing company has consistently lost money but has posted supercharged growth.
Its IPO had been seen as a harbinger for other hotly anticipated offerings in fast-growing, privately held companies such as Uber, Pinterest and Slack.
Kellogg slid 2.4% on news the packaged foods company is selling its Keebler cookie brand and other sweet snacks businesses to Ferrero, an Italian confectionary company best known for making Nutella, for $1.3 billion.
Investors will be focusing more on corporate earnings this month, as the next big wave of company results kick into gear next week.
Wall Street expects a contraction in earnings during the first quarter, followed by slow growth for the remainder of 2019. Any company commentary about their prospects for the next few quarters will be important in giving analysts and investors a better picture of the economy.
Traders also have their eye on the U.S.-Chinese trade negotiations, which are due to resume this week. Officials from the world’s two biggest economies are aiming to put to rest a dispute over technology and other issues.
Energy futures closed higher. Benchmark U.S. crude gained 2.4% to settle at $61.59 a barrel. Brent crude, used to price international oils, closed 2.1% higher at $69.01 a barrel.
Wholesale gasoline added 0.9% to $1.90 a gallon, heating oil picked up 0.8% to $1.99 a gallon and natural gas rose 1.7% to $2.71 per 1,000 cubic feet.
Gold inched 0.3% lower to $1,294.20 an ounce, silver slipped 0.1% to $15.10 an ounce and copper dropped 0.4% to $2.92 a pound.
The dollar rose to 111.37 yen from 110.80 yen on Friday, while the euro weakened to $1.1211 from $1.1214.